Yes Bank shares plunged a day after the Reserve Bank of India (RBI) suspended the private sector lender's board for a period of 30 days "owing to serious deterioration in the financial position of the Bank" and imposed a withdrawal limit of Rs 50,000 on its account holders with few exceptions till April 3. Yes Bank shares crashed 85 per cent of its value to trade at Rs 5.65. The stock closed at Rs 36.80 on Thursday.
RBI on Thursday said a "moratorium" has been imposed on Yes Bank stressing that the bank's financial capability has undergone a steady decline largely due to the inability of the bank to raise capital.
"We will take swift action... And we have a scheme in place to revive Yes Bank," RBI Governor Shaktikanta Das said. The decision on Yes Bank was taken at a "larger level" and not at individual entity level, and was aimed at ensuring the safety of financial system, RBI governor said further. The RBI governor also assured, "RBI stands ready to intervene in whatever way required to respond to epidemic challenges".
The government has restricted the withdrawal of deposits to Rs 50,000 and any withdrawal over and above this amount will require the permission of the Reserve Bank of India.
Moody's said the moratorium was credit negative as it affected timely repayment of depositors and creditors and added that the lack of coordinated action highlighted continued uncertainty over bank resolutions in India.
"Effectively, Yes Bank should have no equity value left," said Sandip Sabharwal, a Mumbai-based fund manager. "Ideally, trading should be suspended till formal restructuring is announced."
"Ideally, trading should be suspended till formal restructuring is announced." SBI said late Thursday that its board had given its in-principle nod to explore an investment in Yes Bank. "We believe forced bailout investors will likely want the bank to be acquired at near zero value to account for risks associated with the stress book and likely loss of deposits," JPMorgan analyst Saurabh Kumar said in a note, as it cut its price target on the lender to Rs 1 from Rs 55 a share.
Yes Bank has struggled to raise capital it needs to stay above regulatory requirements as it battles high levels of bad loans
The Nifty Bank index - comprising shares in 12 of the major lenders in the country including SBI and Yes Bank - plunged 4.5 per cent to 27,491. The BSE Sensex had plunged 1,215 points or 3.1 per cent to 37,262 and NSE Nifty had dived 373 points or 3.3 per cent to 10,900.